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12-11 11:53

$Oracle(ORCL)$ $NVIDIA(NVDA)$ $Taiwan Semiconductor Manufacturing(TSM)$ πŸ”₯πŸ“ŠπŸš€ Oracle Earnings Breakdown, RPO Erupts to $523B, AI Infrastructure Surges, Cash Burn Deepens πŸš€πŸ“ŠπŸ”₯

Market Structure and Technical Overview

Oracle completed a full rotational cycle. Gold tops at $228.50 to $233.80 retraced into gold bottoms at $197.80 to $191.56 which is a structurally clean revisit of the earlier all time high breakout zone. The level is still holding. Technically this remains a healthy retest and not a breakdown. The next directional confirmation will come from whether $ORCL reclaims the mid band.

Headline Results and Earnings Quality

Q2 FY26 delivered headline strength. Adjusted EPS printed $2.26. Revenue reached $16.06B. Cloud revenue accelerated to $8B driven by 68% IaaS expansion. Net income reached $6.14B. RPO surged to $523B which is up 438% year on year and 15% quarter on quarter.

The distortion sits beneath the surface. A $2.7B pre tax gain from the Ampere asset sale inflated profitability. Roughly 40% of Non GAAP net income was non recurring. True operational EPS growth is materially lower once this item is removed.

Bull Case

IaaS revenue grew 68% which confirms that Oracle is taking share in AI training workloads from hyperscalers. Growth has accelerated for four consecutive quarters. RPO at $523B is unprecedented. Sequential RPO growth of $68B signals massive multiyear demand. Meta, NVIDIA, Uber, Temu and others continue to commit to long term capacity. Multi cloud adoption is accelerating with Oracle Database revenue across AWS, Azure and Google Cloud up 817% year on year. The strategy is working at scale. Cloud Application revenue remains steady with Fusion ERP up 18% and NetSuite up 13%.

Bear Case

The earnings beat lacked quality. The Ampere gain inflated operational optics and masks margin pressure. Trailing twelve month free cash flow collapsed from $9.5B to negative $13.2B due to heavy CapEx now at $35.5B. This is the most significant risk. The AI buildout is capital heavy and front loaded. Margins remain under pressure. Non GAAP operating margin of 42% is down from 43% as infrastructure spending absorbs scale benefits.

Themes

Cloud Infrastructure acceleration continues. IaaS is now annualising above $16B with structural momentum that exceeds AWS and Azure on a rate of change basis. Multi cloud adoption is the largest unlock. Dedicated Region and Alloy consumption increased 69% and OCI Marketplace consumption increased 89%. Oracle is building seventy two multi cloud datacentres which removes historical friction around lock in. Cloud applications remain stable compounders. Cloud app deferred revenue grew 14% which is a forward signal of acceleration.

Detailed KPIs

Total revenue grew 14% in USD which is faster than Q1 and Q4. Hardware revenue of $776M grew 7% but remains a low margin segment. Operating margin at 42% shows mild compression as Oracle absorbs infrastructure scaling costs.

Infrastructure Delivery and Capacity Highlights

Oracle delivered nearly 400MW of data centre capacity in the quarter. GPU deployment increased 50% sequentially. The Abilene supercluster is progressing with more than 96,000 NVIDIA GB200 GPUs. AMD MI355 deployments began during the quarter. Uber scaled above 3M cores on OCI. Temu reached nearly 1M cores during BFCM. These are hyperscale customer volumes that validate Oracle’s AI infrastructure position.

Healthcare and Applications

Healthcare continues to expand with 274 customers live on the clinical AI agent. Oracle’s new AI based ambulatory EHR achieved regulatory approval. There were 330 cloud application go lives this quarter. This supports diversification away from pure infrastructure.

Financial Guidance and RPO Timing

Management increased FY26 CapEx guidance by roughly $15B relative to Q1. Q3 revenue growth is expected at 19% to 21% in USD with Non GAAP EPS of $1.70 to $1.74. Currency tailwinds are forecast to add 2% to 3% revenue and $0.06 EPS. Approximately $4B of new RPO from Q2 is expected to convert in FY27.

Capital Structure and Funding Models

Management directly refuted analyst projections suggesting $100B in capital raises would be needed. Actual capital requirements are substantially lower due to customers supplying their own GPUs and suppliers leasing chips instead of selling them upfront. Data centre lease payments do not begin until a facility is fully delivered and operational which significantly improves cash timing.

Margin Profile and Ramp Dynamics

Management clarified that new AI datacentres reach the 30% to 40% gross margin target within a couple of months of going live because expenses are synchronised with revenue generation. This creates a steep margin ramp once clusters activate.

My Verdict

The bull case is anchored by 68% IaaS growth, multi cloud scale, and a $523B RPO engine that provides unmatched forward visibility. The bear case is defined by negative free cash flow, margin compression, and heavy capital intensity. The setup carries enormous upside with equally significant execution requirements.

Key Question

Given that capital needs are now expected to be materially lower than the $100B previously modelled, what annual RPO conversion rate is required to stabilise free cash flow and maintain margin trajectory while supporting hyperscale AI infrastructure expansion.

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Oracle Deepens AI Anxiety: Will It Accelerate the Sell-Off?
Oracle reported its fiscal Q2 2026 results after the market closed on Wednesday, with revenue and cloud revenue both falling short of analyst expectations. The company also posted –$10 billion in free cash flow for the quarter. At the same time, Oracle raised its full-year capital expenditure guidance, saying it now expects to spend about $15 billion more than previously planned. These updates triggered a sharp reaction in the market β€” Oracle’s share price plunged more than 10%.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

  • Kiwi Tigress
    12-12 01:53
    Kiwi Tigress
    ngl your breakdown on that $Oracle(ORCL)$ print actually made me double check a few things yeah the whole Ampere gain thing kinda threw me cos it looked clean on the surface but fr the way you explained the FCF hit and the capex blowout makes way more sense now and lowkey that $197 zone really is holding better than I expected tbh crazy how fast the AI infrastructure flow is moving rn 🀯
  • Tui Jude
    12-12 01:37
    Tui Jude
    Your post nails the distortion effect from the Ampere gain. It shifts how I frame risk for high CapEx operators like $Amazon.com(AMZN)$ since both are navigating similar infrastructure cycles. I’m watching the liquidity pocket around $Oracle(ORCL)$ $205 where resistance clusters with decaying Vanna. Momentum is intact but FCF deterioration reshapes the macro read through. Really smart look at multi cloud flow and how it rerates the whole earnings profile.
  • Cool Cat Winston
    12-12 02:32
    Cool Cat Winston
    I’m reading your Oracle earnings breakdown and the volatility spike around that $197 to $191 support really stands out. The structure still holds but the negative FCF regime changes positioning for names like $Salesforce.com(CRM)$ where momentum is cleaner. The liquidity pockets in IaaS expansion are impressive and that $523B RPO shifts gamma dynamics across the whole AI stack. Macro headwinds matter less when the flow intensity is this strong πŸ’ͺ
  • Hen Solo
    12-12 02:10
    Hen Solo
    I appreciate how you highlighted the RPO inflection because that’s the core signal rather than the noisy EPS headline. It reminds me of the build phase we saw in $Microsoft(MSFT)$ during early Azure scaling. The structure on the chart still respects key support and the flow from hyperscale customers gives the momentum a solid base even with FCF stress. The positioning across AI infra is shifting fast and your take captured that.
  • Kiwi Tigress
    12-12 01:53
    Kiwi Tigress

    Great article, would you like to share it?

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